Financial pyramid for $ 150 million: a famous Russian businessman from the 90s was detained in the USA

Herman Lillevali was detained in the USA. The Ministry of Internal Affairs of Russia considers him the organizer of a financial pyramid that raised $ 150 million under the pretext of investing in Apple and Nike. Nikita Mikhalkov and top managers of Rusal are named among the deceived, writes RBC.

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The American authorities detained the founder of the Dovgan, Smak and Krasnaya Liniya brands, Russian businessman German Lillevali. This was reported to RBC by two sources familiar with the course of his case. The information was also confirmed by a representative of a group of investors who were suing Lillevali in the United States.

In Russia, a businessman is accused of fraud (Article 159 of the Criminal Code); according to investigators, Lillevali, owning an investment holding, plundered wealthy clients' funds under the guise of providing them with brokerage services. Lillevali's consultants offered clients to invest in Apple or Nike stocks, but in reality Lillevali's entourage wasted money; the total damage can be up to $ 150 million, the victims believe.

Delayed departure and Interpol request

The businessman has been in an American immigration prison for more than a month, said a representative of a group of investors. Lillevali entered the United States in early 2020 with an Estonian passport, having previously sold real estate and a car in Estonia; He did not have a visa, and he had the right to stay in the country for up to 90 days. The Florida Southern District Court during this period considered the lawsuit of investors against Lillevali; in June, he satisfied him, deciding to recover more than $ 32 million from the businessman.

A few months later, Lillevali was detained by the immigration authorities. During the audit, it turned out that in addition to the unfulfilled court decision, there is a notice of the search for Lillevali through Interpol from Russia, so he remains under arrest, a representative of the group of plaintiffs said. According to him, Russian law enforcement agencies are seeking the extradition of Lillevali. The difficulty is that there is no extradition agreement between Russia and the United States; moreover, Lillevali, although he has Russian citizenship, entered the United States as an Estonian citizen.

Another interlocutor of RBC, familiar with the course of his Russian criminal case, said that Yegor Zolkin, an investigator from the Internal Affairs Directorate for the North-Western District of Moscow, who is in charge of the case, is aware of Lillevali's arrest in America.

Lawyer Dmitry Nikolaev, who represented Lillevali during the arrest procedure in absentia in the Khoroshevsky court in Moscow, could not comment on his detention in the United States, his position in connection with the claims of investors and the charge brought against the Russian Ministry of Internal Affairs. In the law office of Nikolaev, RBC was informed that he did not have an agreement with Lillevali about any legal assistance and that the lawyer carried out his defense in court on an ad hoc basis. It was not possible to contact other representatives of the businessman, his working e-mail box, like the box of the former financial director of the GL Financial Group, which belonged to Lillevali, is now not working.

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What a businessman is known for

56-year-old German Lillevali is best known for the fact that in 1995 he founded Likomp Holding CJSC. The company was engaged in the development of Russian brands of vodka, products and cosmetics: Dovgan, Smak and Krasnaya Liniya. Lillevali was also involved in the banking business, in 1995-1999 he was a co-owner of the Aktiv bank.

The investment holding Lillevali, with which the claims of the plaintiffs and the Russian police are connected, included the companies Ankor Invest, Giel Finance, and Stolichnaya Financial Group. In 2018, the Central Bank revoked their securities market participant licenses and introduced temporary administration to them. Abroad, Lillevali controlled the companies Stream Network Ltd, Financial Alliance Limited, Stream Network Advisory Limited, GL Finance, GL Asset Management AG, Ankor Finance Global Limided and GL Finance Switzerland, according to the materials of his criminal case.

Apple shares and fake reports

Since 2013, Lillevali has been controlling the financial holding GL Financial Group, which also provided investment services to individuals. In 2018, several investors, whose funds were raised by Lillevali, filed a lawsuit against him in the Florida state court. There were six plaintiffs - top manager of the Swiss pharmaceutical holding Novartis, US citizen Krishnan Ramanatan, Russian citizens Tigran Pogosyan, Alexey Khomyakov, Ramazankadi Yusupov and Dmitry Koryukin, and Ukrainian citizen Svetlana Shcherbakova. Each demanded from several hundred thousand dollars, the total amount of claims - more than $ 10,7 million. Co-defendants in the lawsuit were also Lillevali's relatives, companies controlled by him and their top managers.

The plaintiffs argued that the entrepreneur and his entourage "created more than 30 shell companies around the world and attracted unsuspecting investors with promises of a safe investment strategy and return on investment on demand." In reality, funds from new investors were used to pay off debts to old ones, or were directed "to the personal enrichment of those who ran the scheme."

Consultants from the Lillevali companies offered clients a “robust investment strategy,” including the purchase of shares in companies such as Apple, Nike, Under Armor, General Electric, Citigroup (owns Citibank), Comcast (the broadcasting corporation that owns NBC and Sky television, and the film studio Universal Pictures), Expedia (the travel company that owns Trivago) and many others. Thereafter, clients regularly received reports that reported the growth of their portfolios. “In reality, a significant proportion of client money was either not invested in US publicly traded companies at all, as these reports argued, or it was invested on behalf of the defendants, without considering the interests of the clients,” the lawsuit says. After the license was revoked from his companies, Lillevali stopped answering calls from those customers who had previously personally contacted him.

In June 2020, Judge Federico Moreno granted the plaintiffs' claims and tripled their claims. The decision was made in absentia (default judgment); this means that the defendants did not take any action to defend their position. They were handed summons in all possible ways, the representative of the group of plaintiffs claims. From the materials of the court, which are in the public domain, it follows that in the end five defendants or their representatives managed to deliver the summons to the court, including Herman Lillevali, one of his brothers, Oleg, and the financial director Irina Korytina, but they did not participate in the process steel.

As part of the litigation, the plaintiffs provided the court with information “that since 2015-2016 Lillevali practically did not carry out investment activities to the extent that he and his accomplices declared when attracting investors to Ankor Invest, GL Finance and other companies ”, and that“ part of the funds was used by Lillevali to create a “business effect” in the absence of such a reality in the UK, Cyprus, Latvia, Estonia, Switzerland, Germany, Luxembourg and other countries, ”a representative of the group of plaintiffs told RBC.

He noted that now in the United States there are still "a number of persons involved in the Lillevali scheme" (they have not been detained), and that the investors who won the lawsuit in Florida are seeking "the legalization of the US court decision in Europe and other territories, the initiation of a criminal case on the territory of Estonia and the USA ".

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Pyramid for elite depositors

In Russia, the businessman's case is being conducted by the Internal Affairs Directorate in the capital's North-Western District, in May this year he was put on the international wanted list, and then arrested in absentia. The investigation believes that Lillevali under the guise of an investment holding GL Financial Group, in fact, created a financial pyramid: the criminal group led by him committed theft of money from wealthy clients "under the guise of concluding brokerage agreements or asset trust management", while clients were reported false information about the results their transactions with securities, according to one of the decisions of the investigation, which was reviewed by RBC.

Together with Lillevali, the former head of the GL Financial Group's security service, Alexander Lazeba, the executive director of Ankor Invest, Vladimir Mikhailov, and several client managers of the group are involved.

Kommersant named among the investors whose funds were raised by Lillevali, film director Nikita Mikhalkov, goalkeeper of the Russian national team Marinato Guilherme, political scientist Dmitry Orlov, top managers of Rusal, an American clothing manufacturer Levi Strauss & Co. The newspaper reported that the case referred to two hundred victims.

In total, Lillevali attracted and did not return investments in the amount of more than $ 150 million, the case contains information about 160 facts of fraud, lawyer Sergei Akhundzyanov, who represents the interests of one of the accused managers, told RBC. Initially, five employees of companies from the structure of GL Financial Group appeared in the case, initiated on October 1, 2018, and Lillevali himself was under investigation only after a year and a half. According to the lawyer, managers who “held insignificant positions not related to the management of funds” are “subjected to illegal and unjustified persecution,” while the real beneficiaries of the embezzlement, including Lillevali and his family, were allowed by the investigation to hide abroad, and now their accountability is difficult.

The investigation brought to justice not all the officials of the Lillevali structures, lawyer Igor Davydov told RBC, who represents the interests of a group of 20 victims: “Not all persons have been prosecuted, which means that they have not been put on the wanted list, their property has not been arrested and wanted. Many of them were not even questioned as witnesses, ”the lawyer said.

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